United States securities and exchange commission logo
November 29, 2022
Pablo Brizzio
Chief Financial Officer
Ternium S.A.
26 Boulevard Royal 4th floor
L-2449 Luxembourg
Re: Ternium S.A.
Form 20-F for the
Year Ended December 31, 2021
Form 6-K furnished
April 27, 2022
Response Dated
November 2, 2022
File No. 1-32734
Dear Pablo Brizzio:
We have reviewed your November 2, 2022 response to our comment
letter and have the
following comments. In some of our comments, we may ask you to provide
us with information
so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comments, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
November 2, 2022 letter.
Response letter dated November 2, 2022
Note 4. Segment Information, page F-40
1. We note from your
response to comment 3 that your CODM reviews the Commercial and
Industrial Performance
Report on a monthly basis, which includes financial information or
Mexico, the Southern
Region, Brazil and Other Markets business units. We continue to
have concerns about
your identification of your operating segments. Tell us in detail why
these business units do
not meet the operating segment characteristics described in IFRS 8
paragraph 5.
Specifically address in your response how you considered whether this
business unit financial
information represents operating results that are regularly reviewed
by your CODM to make
decisions about resources to be allocated to each business unit
and assess its
performance.
Pablo Brizzio
FirstName LastNamePablo Brizzio
Ternium S.A.
Comapany 29,
November NameTernium
2022 S.A.
November
Page 2 29, 2022 Page 2
FirstName LastName
2. We note your response to our comment number 1. You state upon
further reflection and
discussions with the Staff, the Company believes that it is more
appropriate to state that
the Company only has two operating segments Mining and Steel, and
that its regional
operations do not qualify as operating segments under IFRS 8.
Expand your response to
walk us through the material factors you considered in this apparent
change to your
identified operating segments. As part of your response, tell us why
the previous
disclosure differs from your current view. We further note the staff
did not provide
guidance on what would constitute the appropriate operating segments,
based on your
facts and circumstances, during our discussions.
3. We note from your proposed revisions to your segment footnote on page
2 of your
response, that the CEO holds monthly meetings in which operating and
financial
performance information is reviewed, including financial information
that differs from
IFRS (with certain differences listed). However, the table below this
narrative in your
response appears to be consistent with the IFRS financial statements
for the totals
presented. Resolve this inconsistency for us.
4. We note the organization chart provided in your response to our
comment number 2. As
previously requested, identify and describe the role of each of your
segment managers.
Refer to IFRS 8 paragraph 9. Also, explain to us the role of the
Global Planning Direction
and how that position may interact with the Area Managers
5. In your response to comment number 2 you state The CODM evaluates
the operations
and performance of the Steel business as a whole, using operating
income as the key
performance measure. In addition, decision-making is carried out with
respect to
Ternium s Steel business in all markets in the aggregate. Provide
us more detail as to
how the CODM allocates resources to the business and assesses its
performance,
including the nature of decisions made by the CODM as they relate to
any of the
geographic regions. Also, as previously requested, identify for us the
key operating
decisions necessary to run the business and identify for us who makes
those decisions.
6. In the same response, you describe the budget, which is prepared by
the Global Planning
Direction and presented to the CEO. The CEO meets with those
responsible for each
department/direction and makes observations, determines any
required amendments
prior to approval. To help us better understand your response,
identify the individuals
involved at each level of the budget process from the beginning to
final approval, and the
nature of their involvement. As part of your response, explain the
role of the Area
Managers and Global Planning Direction in budgeting, and how budgets
for sales and
costs of each region are developed.
7. We note your response to comment #2 relating to compensation. Clearly
indicate if any
of the Area Managers or segment manager s compensation is based on
financial metrics
calculated below a consolidated level, and if so, what those metrics
are.
8. In your response to comment 3, you identified the Steel profit center
regional detailed
table as one of the two main schedules of the Commercial and
Industrial Performance
Pablo Brizzio
Ternium S.A.
November 29, 2022
Page 3
Report. Explain to us the purpose of this schedule and how each of the
Business Units
commercial results and Production Units results are used by the
CODM, including the
use of any budget to actual information. Also expand further on your
statement that this
table does not have a unit of measurement for purposes of allocating
resources and
evaluating performance.
9. We further note you disclose that the CODM receives from time to
time a variety of
financial and non-financial reports and reviews certain information by
geographic region
to assess the industrial and commercial performance in the different
areas. Explain to us
the nature of the information included in these reports, if different
from that included in
the response, the frequency with which they are received, and explain
to us how these
reports are used to assess performance but are not used to determine
how to allocate
resources.
10. We note your response that the Steel profit center regional detailed
table includes only
sales to external customers for the geographic regions in the Steel
segment. Explain why
this table does not include intercompany transaction. Additionally,
tell us if any
intercompany sales information is provided to the CODM and if so tell
us how he uses
that information.
You may contact Charles Eastman at (202) 551-3794 or Claire Erlanger at
(202) 551-
3301 with any questions.
FirstName LastNamePablo Brizzio Sincerely,
Comapany NameTernium S.A.
Division of
Corporation Finance
November 29, 2022 Page 3 Office of
Manufacturing
FirstName LastName